2

BUSINESS PLANS YOU KNOW AND TRUST

I’ve been rich and I’ve been poor. Believe me, rich is better.

—MAE WEST

Chapter 2 Exercise—Create a Business Plan

We’re just starting out, and already you’re ready to turn the page. You’re thinking, I don’t need a business plan. I know what I’m doing. It’s just me, basically working from notes in my back pocket.

You might just do all right playing it by ear. But why not do great?

Frankly, you’re going to need a business plan if you want to succeed. You will especially need a business plan if you fail (to protect your tax deductions—I’ll explain in a moment). Without a plan, you’re courting failure. There are so many details to remember in a business, it’s hard to keep track of them without a scorecard, especially when you’re working alone. Why sabotage your chances for success? Are you one of those people who are secretly afraid to succeed? Get over it! Take the time to sit down, make a few notes, and shoot for success.

Why You Need a Business Plan

The main reason you need a business plan is that the IRS will want to see it when your tax return shows losses for the first several years.

I know. You don’t plan to have losses. But even the best-laid plans sometimes go wrong. When you run losses for more than two or three years, that business plan is going to make the difference between getting to keep those deductions and having the IRS disallow them all under the “hobby loss rules.” We’ll talk about those next.

You’re almost asking for an audit if your business shows a loss for more than two years out of five (or five years out of seven if you’re dealing with the breeding, training, showing, or racing of horses). With the country in financial crisis and with a tax gap of $458 billion and growing, the IRS is putting more energy into audits that it knows it can win. The IRS’s audit software can be aimed to select returns that really do have something wrong with them. Businesses with constant losses are a prime target.

Why? What’s the point of being in business if you cannot make a profit? You might as well go out and get a job! This makes perfect sense, doesn’t it? After all, if this is your business, how are you going to live on losses? You certainly won’t make it up in volume!

Of course, if this is a hobby, that’s another story. In that case, you are not entitled to be deducting those losses, without severe limits. That’s where the IRS gets you—eliminating or limiting your deductions for what you thought were your business expenses.

A business plan can help overcome the “hobby loss” argument during an audit!

What Is a Hobby Loss, and Why Do We Care?

Let’s look at the information straight out of the tax code:

IRC §183(d) Presumption: If the gross income derived from an activity for 3 or more of the taxable years in the period of 5 consecutive taxable years which ends with the taxable year exceeds the deductions attributable to such activity (determined without regard to whether or not such activity is engaged in for profit), then, unless the Secretary establishes to the contrary, such activity shall be presumed for purposes of this chapter for such taxable year to be an activity engaged in for profit. In the case of an activity which consists in major part of the breeding, training, showing, or racing of horses, the preceding sentence shall be applied by substituting “2” for “3” and “7” for “5.”

When the IRS considers your business to be a hobby, you have several strikes against you:

1.  Your expenses are only deductible to the extent of your gross income. So if you have $10,000 worth of expenses, but your income is only $2,000, you waste $8,000. Those extra costs don’t get carried forward, suspended, or anything. They’re just gone. Poof!

2.  You can’t use Schedule C. You must report your expenses on Schedule A as miscellaneous itemized deductions.

3.  Your “hobby” expenses are further reduced by 2 percent of your AGI, your adjusted gross income (the last number on page 1 of the Form 1040). That means if your AGI is $50,000, you lose another $1,000 worth of your expenses—aside from the expenses you lost because they were limited to your gross income.

4.  You have to report the income on page 1 of Form 1040 on the “Other income” line, which increases your AGI. That could cause you to lose a variety of credits and deductions—and could throw your taxes into the alternative minimum tax (AMT) bracket.

Now that you understand a little about why you don’t want hobby losses, here’s how to avoid them. Look at these nine factors that the IRS considers important:

1.  The manner in which the taxpayer carried on the activity

2.  The expertise of the taxpayer or his or her advisors

3.  The time and effort expended by the taxpayer in carrying on the activity

4.  The expectation that the assets used in the activity may appreciate in value

5.  The success of the taxpayer in carrying on other similar or dissimilar activities

6.  The taxpayer’s history of income or loss with respect to the activity

7.  The amount of occasional profits, if any, which are earned

8.  The financial status of the taxpayer

9.  The elements of personal pleasure or recreation in this business

Real Business—Planned Losses

What if you know, at the outset, that it will take you 5 or 10 years of losses, as you build up your product or your market, before you make a profit? What if you know that if you can hang on for those 10 years, you’re going to make millions?

The IRS doesn’t know that. It has no way of knowing. But when the IRS comes along with its audit, the strongest defense you can have is your solid business plan in hand. Oh, you’ll need a few more tools, as you’ll see in Chapter 13, but the foundation of your audit defense will be your plan.

General Benefits

You’re clear on the tax reason for the business plan, right? What other benefits can it give you? The five Cs:

•  Clarity and focus. A plan can save you lots of time. You won’t be floundering, wondering what to do next. You will understand your own business better.

•  Cost control. A plan can help you keep your costs under control because you’re not just shotgunning your spending. You only spend money on those things that are part of your plan.

•  Capital. Except for small amounts of money, you won’t get a bank loan or attract investors unless you have a business plan. Of course, you could use your credit cards . . . and with the no-interest or low-interest rate cards, that might even be a good option. But, at best, you’re not going to get more than $5,000 to $50,000 that way. If you want real money—enough to fund your operation and let you fill large orders (for products or services)—you need a plan. No one will give you money if you don’t understand your own business.

•  Confidence. It’s amazing the way your self-respect and confidence soar when you know what you’re doing. You can look people in the eye and give them straight answers when they ask you how your business is doing.

•  Copiousness and growth. Decide up front just how large you’d like your business to be. You may as well put the correct systems in place for the future—leaving room for expansion of software, phone systems, and so on. Decide if you plan to go public, build the business just so far and sell it, leave it to your children, or turn it into a franchise or a multilevel marketing operation. You can always decide to keep it small later. But to grow, when you haven’t planned for it, will cost much more down the road.

The Fine Line Between Success and Failure

Running a business was easy as long as I just had my tax practice. It was a cinch to plan out what needed to be done by what date, how many clients I had to see, by when, and so on. One of the things I’ve discovered since operating on the Internet is that the world is full of distractions, temptations, and opportunities. You’re going to find yourself being pulled in many directions. They all look like exciting opportunities. If you give in to those offers and invitations of quick money, you will slowly learn that if you had just stuck with your own business and your own plan, you’d be much further ahead.

The price of distraction is more than mere dollars. Time is also a finite commodity. My husband is too kind to point out that by simply focusing on my tax practice, I’d have more evenings and most weekends free. We’d be totally out of debt—even to the point of having our mortgage paid off. Instead, because I am guilty of succumbing to those alluring temptations, I work 12 to 15 hours each day, including most evenings and practically every weekend and holiday. (We’re only nearly out of debt. Due to my cancer episode, income dropped off for a while and debt rose. It will be paid off in a couple of years—but not yet. There’s always something, isn’t there?)

Sure, I love what I do—all the things I do. But sometimes it would be really nice to do a bit less—quite a bit less. That’s my price of success, spreading myself too thin. However, I have a plan in place that will let me gradually reduce my workload and raise my income to the point where, in another year or two, my time and life will be in balance again. Oops! More interesting projects cropped up. I must redefine my time budget!

Is trying to do everything worth it? That’s a personal decision. You’ll have to decide. Let’s see what happened to a few people and how they did or didn’t focus.

Success

In 2004, we met Brad Waller and his partners, who started EPage (http://epage.com/) in 1996. Brad and EPage just boringly focused on their business plan and deflected distractions. All their energies went into building an online classified system for websites to use as their own. They were pioneers in income-sharing programs like affiliate commissions (Amazon.com’s came later).

In 2004, they had 27,000 merchant sites, had run nearly half a million ads, and had attracted more than 5 million page views a month, with more than three-quarters of a million visitors. EPage never needed to get venture capital. The business has been supporting all the original founders, plus several employees, full-time for years. Better yet, Brad’s marketing efforts require that he take an annual cruise to the Bahamas and trips to Hawaii and other exotic locations—as part of marketing conferences. Yes, life is tough.

What has happened since then? Growth is slow, but business is steady. EPage.com still serves half a million ads to over 850,000 visitors. It has more than 28,000 affiliates still telling the world about EPage.com.

And there’s been a vision change—Brad recognized a powerful opportunity with telephone applications. He created a series of iPhone applications relating to online auctions and shopping. As a result of success in this area, Brad’s team has moved the company into a new market with a do-it-yourself iPhone application site—http://iTaxMama.com/uBuildApp.

Giving It Away Means More Profits

Philip Tirone’s business ventures have done really well over the years, after a few bumps here and there. These days, he’s feeling very fortunate. But Philip has seen others struggling through the credit disasters that befell them when they lost jobs and homes and destroyed their credit. Tirone set up a free credit resource, http://www.720creditscore.com, to provide information to help people fix their own credit. There’s a glossary with an explanation of the FICO system and credit scores, information about recovering from bankruptcy, the various laws that apply to credit ratings, and more.

That’s a bit like the way TaxMama started waaay back when, teaching people to do their own tax returns. Most people, once they saw how much work was involved, hired TaxMama to do it for them. The same thing happened to Philip. Tirone’s well-done site with free resources led to sales of his paid service. Giving away high-quality information builds confidence in the marketplace. People get to know who you are and the quality of your work. Incorporating the right set of free products or services, managed properly, can lead to financial independence. Today, Tirone works when he wants, where he wants (with an Internet connection, you can work from practically anywhere on the planet), and he relishes the time he spends with his wife and young children.

Too Much Success Equals Failure

Carolin Benjamin had the most charming idea for a site: http://www.dujour.com. (The site you see today is a totally different operation and concept—not hers.) When she started the site, it told visitors the holiday of the day. It was a place where you could play games for free, test your knowledge, compete against other people, and win prizes. Participants registered for free. Starting in November 1996, Carolin got the idea to invite merchants who wanted exposure to donate prizes, daily, weekly, or monthly, depending on the kind of visibility they wanted. The site was an instant hit, attracting more than 80,000 visitors a day, myself included. I loved to play there and won an elegant wooden pen and pencil set as well as other handcrafted items. I still use the handmade soup mugs I won. Well, Carolin had the traffic and the prizes. But where was the revenue? She and her partner were too busy with their day jobs to plan how to make money.

Frankly, even with all the traffic, it was hard to find paying advertisers. Carolin maintained the site for several years, staying up most of the night to post winners, send out prize announcements, and respond to volumes of e-mail. She nearly collapsed from exhaustion. Carolin had to sell the site. Why was the workload too much? She made the same mistake many companies make—even large ones: she didn’t plan for success. She had traffic but not the means or resources to respond to her members’ needs—or the income to cover the costs of additional help.

Carolin finally gave up the URL. These days, she runs a real estate business with her husband in Arizona.

Failure, Well, Almost

In Australia, Ian Purdie started putting up articles about electronics, ham radios, audio devices, and all kinds of related technical and hobby information. His site, http://electronics-tutorials.com, became so popular that universities were using his free technical articles in their courses. Ian believed that if he put high-quality information out there, people would be sensible enough to contribute funds, or tip him, to support keeping the site alive. Even small sums would be welcome. Amazon offered a payment system, so Ian didn’t need to incur the cost of merchant credit card accounts. His costs weren’t high. Living on a pension, he could, essentially, get by.

Though users sent him many letters of high praise, few—if any—made donations. Few people used his links to buy their books or supplies, which would have let him generate commissions from their purchases. They’d buy those things—but not so he got the credit. Ian never diminished the quality of the articles he provided, despite years of frustration at the lack of financial support. Finally, he just about gave up.

Why did he fail? He didn’t have a business plan. Ian never arranged for a way to charge students and readers for his how-to articles. He never thought through the issue of where his income was going to come from. He just believed that people would be honorable and make contributions to support his useful site. To his credit, unlike Carolin, he didn’t have to spend hours each night dealing with time-sensitive prizes and things. He could choose to add articles or not, as he saw fit. But he didn’t have any money, either.

He was just about to do something violent to his computer when he got really lucky. The Google folks came along with Adsense, which provides a stream of advertising revenues. But that’s another story for another time. Today, Ian is in clover, and his business is a labor of love again.

Utter Failure

Mike was a very popular Realtor in Southern California, earning a six-figure income as a sales manager for a real estate brokerage, when a friend of his invited him to open a business leasing private homes and condominiums. When Mike broached the idea to me, I did my best to persuade him to do two things: (1) work out a business plan, and (2) keep his day job. He could build up his new business slowly, from home, with a low overhead until it generated enough money to support him. In fact, if he’d told his boss about it, chances were, he’d have supported him, even to the point of helping him capitalize the business. No one else was making a concerted effort to tap into the San Fernando Valley market (in Los Angeles, California) with a comprehensive service providing leasing and management for owners of single units. There was a demand for this service, not just among the homeowners needing tenants, but by people looking for places to rent. Renters would keep running into those bait-and-switch ads, offering them attractive houses, condos, or guesthouses—then telling them they’d have to pay a fee to get the address. When they finally did get the addresses, those units were already taken (probably always were) or didn’t exist.

So with this great potential market, off he went, returning to me several months later. Mike had skipped the business plan. He also had quit his job and opened an expensive office. His overhead, before he got to take home a single dime, was more than $17,000 a month, but his income was nowhere near that. He was lucky to generate $2,000 per month. To support his business, Mike was drawing money from savings.

Mike begged me to help, so I stepped in and cut his costs by $10,000 a month, even after my fees. It turns out that although he was an expert in real estate sales, he didn’t understand how the leasing business worked. Mike was still paying out of his own pocket for expenses that the homeowners should be paying. The owners paid them willingly once we rewrote the contracts.

We doubled his sales overnight by getting some high-end brokerages to refer their low-commission home leasing business to him. In fact, one brokerage owner told his staff that they must forward all leases to Mike. If he ever saw them wasting their time with a lease, they’d be fired. (You have to understand the economics. It takes about the same amount of time to find tenants as it does to find buyers, showing them lots and lots of houses. But where leasing a luxury home might garner a commission of $3,000, selling that same home will generate more than $30,000.)

Those referrals doubled Mike’s revenues, but it was too late. His business was still hemorrhaging money. Even though he’d been in business less than a year, Mike had dipped so deeply into his financial reserves that within a few more months, he had to file for bankruptcy. It’s a real shame. He was one of the most popular members of the local Board of Realtors. The other members would have been very happy to refer their leasing business to someone reliable. Had Mike started out with a budget, low overhead, and better information, he’d literally be a millionaire today.

Exit Strategy—Taking It Public

A few years ago, Kevin Reeth and Ben Curren, both former Intuit employees, were immersed in their own web development company. Seeing that the increasingly complex and function-packed software left the really small business owner totally confused, they took a gamble. They developed a versatile application to provide the individual business owner with simplified online bookkeeping services at http://www.Outright.com. A free application, it was funded by additional services they provided the business owner to make life simple. Nearly from the outset, they structured the business for venture capital. The first round of investors came easily. By May 2010, they had processed over $2 billion in transactions. Their exit strategy was to take the company public, make millions of dollars, and stay involved because it was fun! In 2012, however, they sold the company to GoDaddy for a package of nearly $20 million in cash and stock.

Exit Plans for Fun and Profit

Not everyone wants to die in the saddle. Many of us want to taper down our business activities, sell the business, or turn it over to the next generation. You can see how good the results can be if you actually plan your exit, instead of just letting it happen. After all, without a plan (like without a will), situations happen and you could lose control.

How many people have you seen who became incapacitated or died and there was no plan in place to have someone take over the business or the customers or clients? The heirs didn’t even know where to begin to save the business—and it became worthless or was sold for pennies on the dollar. That’s a shameful waste.

So, how do you start an exit plan? I suggest you sit down with a business professional who specializes in exit plans or venture capital (if that’s the direction you want to go). Or, the SBA has a resource for you—http://iTaxMama.com/SBA_Exit.

One friend of mine has successfully created a series of tech-related businesses that he builds up and sells for millions—every five years. He is what I would call, a “serial exiter.” Knowing someone like that can be great for your financial health, don’t you think? This is another reason to build a team of advisors. They can help you make the contacts you need to develop a viable exit plan.

Letting Your Ego Rule

Can you name one living person who personified great success, but turned it into a smashing failure for a time?

Yes, the answer is Martha Stewart. Her company, Martha Stewart Living, Omnimedia, Inc. (NYSE MSO), almost folded after her conviction. Large blocks of television stations dropped her show. Since the show was all Martha—and she was going to jail—even if they hadn’t dropped her, who was in the wings to take her place? No one.

As a result, when she was indicted, then tried, and then convicted, the MSO stock went from more than $20 a share to below $10 in April 2004. In April 2010, the price was $7.30.

What’s the criticism here? Surely, Martha had a business plan. No one could be more focused than she was. The problem is the excessive focus—on her, on Martha. Unlike most media businesses that plan to survive for the long run, everything was about Martha. She made no provisions, even after the indictment, to introduce someone else into her television show or on her radio features. There should have been someone groomed to become her replacement if she was convicted—or if she died. The MSO business plan didn’t have any continuity built in.

However, when Stewart stepped out of jail her personal reputation rebounded, and her popularity has soared. In fact, several years later, in June 2015, Martha Stewart Living Omnimedia sold for $353 million to Sequential Brands. Not bad for something that seemed doomed to fail!

But not everyone has Martha Stewart’s charisma and drive. So, please be sure to treat your business as an entity of its own. Why build something up that no one can step into and take over if you get sick or die? If you tie it too closely to your irreplaceable personal services and your own name, your business won’t have any value to anyone else. You won’t be able to sell it.

Let’s Not Fail Due to Success

Are you getting the idea? Even if you’re on a success track, if you don’t have a business plan in place to deal with that success, you’re apt to fail. (Talk about a monotonous refrain!) These are the kinds of things to think about to prepare for success:

•  Your ads are successful. Your phones are ringing off the hook. What do you do when the phone lines are jammed with customers wanting to give you money—but you haven’t made any provisions for enough people to answer the phones?

•  You get the largest order of your career. Where are you going to manufacture it? Or where will you get the trained staff to perform all those services on short notice?

•  You get the largest order of the year. You can find the staff and facilities to fulfill it. But where are you going to get the money to pay for it all until you collect your accounts receivable from this sale—probably three to six months after you deliver the product or service?

•  You introduce a new electronic product that can be downloaded from the web. It’s all automated. No sweat, right? You get a great review in PC Magazine, and Seth Myers and Jimmy Fallon are all over it with their jokes in their nightly routines. You get so much traffic that your website crashes. Can you bring new bandwidth online in time to save the sales? Or count on mirror sites?

Outline of a Plan

Many different books, software, and websites are available to help you create a good business plan. Whatever you use, even if it’s only a simple list, there are 10 basic elements you’ll need to consider (see Table 2.1). Answer these 10 questions. Use them to build your business plan using the books or tools that follow. With good planning, you are bound to succeed.

TABLE 2.1 Ten Fundamental Questions for a Business Plan

Important Things to Consider

When you sit down to develop your business plan, be sure to understand how you (and your partners) are going to be spending your time in this business. Face up to the tasks you hate to do. The simple fact is—if you hate to do something, you’ll slough it off, do it poorly, or not do it at all. Don’t economize by promising to do something you hate. The onerous tasks will be different for each person. Some people just dread having to sell. If you can’t overcome that, delegate it. Or hire someone to do it. Others hate to do bookkeeping. If you have a mental block against it, don’t torture yourself. Find someone on your team, or outside, who loves that task. Build the costs of delegation into your plan.

Sometimes, with the right team of people, it will work out perfectly. Be sure to have all the team members define their expectations—of themselves, of you, and of the company—so you’re all going in the same direction. Have them put it in writing so everyone can see what each person expects to be doing—and what they think others’ duties are.

Team Building in College

Working on my master’s degree at California State University at Fullerton at night, I soon discovered that most of the courses required team projects. At first, I was incensed. My grade would depend on three other people, strangers, who were also working full-time during the day. Although most of them were men, somehow I always ended up being the group leader. That was fine with me. But assigning tasks would be touchy. Who was going to get the bad tasks or the grunt work? Well, drawing each person out, I learned that they each had a different idea of the chump job. There was usually someone who reveled in research. (Before the Internet, I hated that. Now, it’s easy.) There was often someone who was a great typist (yes, before word processors and instant corrections) or had a secretary who was willing to type our papers, or someone who loved to create charts and analyze statistics. Most of them hated to write. For me, that was the easiest part of the job. They were relieved to be off the hook—I felt I was getting away with murder, sending them all out to dig up the information and present it to me. All I had to do was to organize it and write it up. Someone else was going to make it look pretty. We each did our share of the work gladly, because we were each using our strengths. Those teams generally earned As.

Play to your strengths.

Of course, working to your strengths isn’t just for college. Smart adults deeply engrossed in routine work will suddenly wake up to realize how much time they’re expending on tasks that others should be doing. Robert MacPhee is the author of Manifesting for Non-Gurus (http://robertmacphee.com/the-book). He teaches a simple five-step approach to attracting more of the results that people want in their lives. With his help, people learn to be clear about who they are, clear about their intended results, and connected to the feelings and emotions they want to experience. They learn to let go of attachments and consistently take inspired action. By doing this, they attract their desired results more quickly and easily. Robert says that the best part of teaching this work is getting the chance to practice what he preaches. That’s how he ended up with his amazing assistant, Beth. I love this! Let’s let Robert tell you his own story.

Manifesting My Assistant

I was sitting in my office one day, very busy as usual, feeling frustrated that I was unable to keep up with the demands of my workload. The thought occurred to me that I was spending way too much time working on things I did not need to be doing myself. I realized in that moment that I needed to get some help. But the thought of writing an ad, getting it printed, interviewing candidates, selecting someone, training that person, hoping he or she worked out . . . It all seemed like even more work, and I was not even feeling optimistic about the result!

But then I realized what I was doing. I was imagining the exact outcome I didn’t want—doing exactly what I coach others not to do. So I decided to practice what I preach. I asked myself what result I did want. I realized I wanted someone I could trust, who wanted to work from home, who wanted to work part-time, who could work independently, and who would be fun to work with. I paused and tapped into the feeling and emotion of what finding that person would mean, and then I let go of any attachment to needing it to happen in any certain way or by any certain time (mostly because I was so busy I had to get back to work!).

The very next day, I received an e-mail from Beth, with whom I had worked before. She told me that she had recently had a baby and was looking for part-time work. Would I be interested in having her come back to work with me? She was able to work from home, only wanted part-time, and was fully capable of working independently. I knew I could absolutely trust her, and she was fun. Sound familiar?

She is still working with me to this day!

There’s a big advantage to having a reliable assistant, even part-time. The right person can make your company look bigger and more professional. That person can take over tasks that don’t require your personal spark of creativity. And he or she can free you up to take on projects you wouldn’t otherwise have time to tackle. In Robert’s case, when the opportunity arose to become director of training for Jack Canfield’s Training Group, he had Beth to help keep his own business running.

Rebalancing Your Business Plan for Tax Consequences

You’re always hearing stockbrokers and investment advisors talking about rebalancing your investment portfolio. That means once you’ve agreed on an investment approach, with a specific percentage of your money in various risk levels of investment, you need to review it each year. As the values of the investments change due to price fluctuations, dividends, and capital gains, one group may become worth more or less in proportion to the other groups. To keep the proportions in balance, you may have to sell some units of one group or buy units of another.

Use the same concept with your business plan. Review it annually to make sure you’re on track with your overall goals.

Then review it again to see how any tax law changes, phaseouts, or phase-ins affect your business. Particularly, look at depreciation rules—politicians like to change this area often, increasing or complicating the deductions or credits. Look at business credits. Are there new incentives in place for hiring, locations, or special industries? Expect changes in the areas of travel, meals, and gifts. Those need updating for this millennium.

What are the top three best things about having a good business plan in place?

1.  You’ll spend much less time and money running your business. By not floundering and wasting time and money going in too many directions, all your investment will go toward producing profits.

2.  You’ll be able to take the best advantage of tax benefits available to your business, income level, or industry.

3.  You’ll be in good shape if you’re ever audited. The IRS so rarely sees business plans for small businesses. When it does see that level of organization and discipline in that area, it will believe you’ve carried that thoroughness through into your accounting and tax areas, too.

Business Plan Books and Resources

If you’re going to get tools and resources, don’t go cheap. Saving yourself $50 to buy a cheaper resource may cost you much more in the time you’ll spend to find the information that’s probably already in the more expensive tool. Whenever possible, get the material on disk or CD so you can copy and paste or fill in forms. It will save you more time than you can imagine. Besides, electronic media lets you click on links to resources to go directly to additional information as you need it.

IRS Resources

•  Starting a Business. https://www.irs.gov/businesses/small-businesses-self-employed/starting-a-business. An overview of links to IRS resources to help structure and operate your business.

•  Checklist for Starting a Business. https://www.irs.gov/businesses/small-businesses-self-employed/checklist-for-starting-a-business. This includes links to get your Employer Identification Number (EIN), and other initial steps you need to take—most of which are also outlined in Chapter 1 of this book.

•  IRS Audit Technique Guide for Hobbies. https://www.irs.gov/pub/irs-utl/irc183activitiesnotengagedinforprofit.pdf. A secret glimpse into how the IRS audits your business when they don’t think you really have a profit motive. Don’t wait to get audited to read this. Use this guide to help structure your business to avoid getting caught in the hobby-loss audit trap.

Books and CDs

•  Small Business Management: An Entrepreneur’s Guidebook with CD Business Plan Templates (with CD) by Leon Megginson, Mary Jane Byrd, and William L. Megginson. Not only does this cover setting up a business plan, it guides you through marketing, budgeting, growing, and the continuity of the family business. It is a most comprehensive book.

•  Nolo’s Tax Savvy for Small Business by Frederick W. Daily. Looks at setting up a business and selecting a business entity from an attorney’s point of view. It’s an excellent companion piece to this book. You can get it from nolo.com or Amazon.com.

•  Business Plan Pro on CD. This includes sample business plans, financial statements for thousands of industries, SBA loan documents, and links to loan sources and venture capital.

•  Nolo’s How to Write a Business Plan by Mike McKeever. This book helps you evaluate your idea’s profitability, estimate your expenses, and prepare your cash flow forecasts. It offers tips about sources of funds—and where not to get them. The Nolo books are available from www.nolo.com.

Online Resources

•  IRS audios and videos on disaster planning and continuity planning. http://www.tax.gov/Professional/DisasterInformation.

•  The Small Business Administration. https://www.sba.gov/.

•  Links to business plans. http://iTaxMama.com/SBA_BusPlan.

•  Center for Business Planning. http://www.businessplans.org. The center conducts a Moot Corp competition and posts the best sample business plans online at the Moot Corp® Competition at http://www.businessplans.org/businessplans.html.

•  Inc. magazine. http://www.inc.com. Inc.’s Business Plan Guide walks you through your business plan, step-by-step, at http://www.inc.com/writing-a-business-plan.

•  Entrepreneur magazine. https://www.entrepreneur.com/. A series of articles and guides, including tips from Wharton’s Business Plan competition, is available at https://www.entrepreneur.com/article/247574.

•  The Small Business Advocate. http://www.smallbusinessadvocate.com/. Jim Blasingame’s radio show offers a flood of helpful information, and there’s a wealth of articles, links, and interviews archived on his site. The “Gentleman of the Airwaves” (my title for him) is accessible for guidance if you need help. TaxMama has been a member of Jim’s Brain Trust since the very beginning. Listen to 18 years of interviews at http://www.smallbusinessadvocate.com/small-business-experts/eva-rosenberg-222.

•  CyberSchmooze at the IdeaCafe. http://www.businessownersideacafe.com/cyberschmooz. Brainstorm with other business owners, and have those who’ve “been there, done that” examine your problems through fresh eyes.

•  Printable Checklist. http://www.printablechecklists.com. For business or personal, you’ll find a variety of fun and practical tools to help you get organized. You can find their business-related checklists at http://www.printablechecklists.com/menu/business.shtml.

•  The Myth of Being Solo in Business by Mark Silver, founder of Heart of Business.com. http://iTaxMama.com/Heart_of_Business. Articles and information you will find interesting, along with a spiritual perspective on business.

•  TaxMama’s Quick Look-Ups. http://iTaxMama.com/TM_QuickLookUp. You will find all kinds of useful reference materials, webinars you can replay, e-books, and more.

•  Your Business Bible. http://www.yourbusinessbible.com. Look for worksheets, printable checklists, and other goodies and resources.